Crown Investments Corporation
of Saskatchewan
Analysis of a Possible Business Relationship
between the Saskatchewan Roughrider Football
Club Inc. and a New Multi-Purpose Entertainment
Facility in Regina
Phase 1 Report
December 2, 2009
Table of Contents
Executive summary
1
Scope of the analysis and key project activities
4
Stadium operations
5
Stadium naming rights
11
Capital contributions and leasehold improvements
12
Other material aspects of the relationship
18
Executive summary
This report contains the results of phase 1 of our project to assist Crown
Investments Corporation of Saskatchewan (“CIC”) in analyzing the
existing business relationship between the Saskatchewan Roughrider
Football Club (the “Roughriders”) and the City of Regina (the “City”).
A) Stadium operations
1) Lease and Licence Agreement
The existing business relationship between the Roughriders and the City is largely
built around the existing lease agreement for Mosaic Stadium.
Under the terms of the existing lease between the Roughriders and the City the
annual rent is the lesser of $200,000 or 25% of annual net profits. All revenues,
costs and expenses from any Grey Cup game are excluded in the calculation of
rent under the lease. In exchange, the City grants to the Roughriders:

Use of the stadium as required on game days and the right to use the playing
field area of the stadium for purposes of practices and certain special
promotions;

Use of the practice field;

Use of certain parking areas around the stadium on game days;

The exclusive right to sell food and beverage concessions at the stadium and
the practice field;

A license to use and occupy the club seating areas; and

An exclusive licence to sell souvenirs and retail products in respect to the retail
sales area as shown in the agreement.
The City is responsible for structural repairs to the premises except the structure
supporting the eastside club seating and all other improvements constructed by
the Roughriders, maintenance with respect to practice field, the synthetic turf, as
well as structural components and mechanical systems at the facility. The City is
also responsible for maintaining the seating and landscaping and all necessary
cleanup and maintenance other than with respect to the premises (as defined in
Lease and License Agreement as described on page 6).
The Roughriders are responsible for their share of utility charges for the stadium
and the cost of security for all games and other events. In addition, the
Roughriders must maintain general liability and tenant’s legal liability insurance.
With respect to playing field and facility upgrades, the City allocates all rents
received by the City to the cost of playing field and stadium upgrades. In addition,
the City and the Roughriders agreed that the two dollar surcharge on game
admission tickets is used exclusively for capital improvements (the surcharge was
increased to three dollars in 2008).
It is important to note that the Roughriders are the principal tenant of the stadium
and as such they generally have unrestricted access to the stadium, the playing
field area of the stadium and the practice field.
1
2) Financial information with respect to stadium operations
The following summarizes the financial impacts of the lease and business
relationship between the Roughriders and the City related to stadium operations.
KPMG analyzed two different years, 1997 and 2007, to determine the financial
impact of the lease and business relationship under what might be termed worst
case and better case financial scenarios.
Stadium operations
(unaudited)
2007
1997
Sales
Tickets and club seating
$ 8,704,256
$ 4,068,355
Merchandise
3,685,173
552,708
Sponsorship and signage
3,414,146
386,000
Concessions
2,081,399
762,310
293,564
*
Green and white lounge
Parking
Total
89,374
39,150
18,267,912
5,808,883
Expenses
Merchandise
2,542,769
491,910
Concessions
1,027,114
346,555
Sponsorships and signage
310,657
6,026
Rent
200,000
-
Video board operation
195,684
-
Security
180,584
50,990
Utilities
175,186
110,404
Green and white lounge
114,143
*
Other
198,888
18,646
4,945,025
1,024,531
Total
* In 1997 the Green and White Lounge information was lumped in with the other
income and expenses
B) Stadium naming rights
The Roughriders, with approval from the City, have sold to Mosaic Canada certain
sponsorship rights, most notably, naming rights to Mosaic Stadium which includes
signage on the exterior of the stadium and turf signage for a ten year period for a
total fee of $3,750,000 of which $562,500 has been allocated to a Stadium
Improvement Fund. The sponsorship agreement contains cancellation, default and
termination clauses but does not specifically contemplate a scenario of the
Roughriders moving into a new stadium.
C) Capital contributions and leasehold improvements
Since 1995 the Roughriders have spent approximately $6.2 million on
improvements to the stadium. This includes funding all construction costs for the
2
East Side Club Seating built in 1995 and West Side Club seating renovations,
sharing a portion of the costs of turf replacements with the City in 2000 and 2007
and paying for all construction and installation costs associated with video and
score boards (MaxTron and north media tower). Furthermore, the Roughriders
have made leasehold improvements on the stadium including concessions, locker
rooms, offices, club seating and press box areas, the Green & White Lounge, the
south end zone, the concourse and stadium façade and signage.
D) Special events
The Roughriders have generated net profits from special events held at Mosaic
Stadium. In 1995 the Roughriders hosted the 83rd Grey Cup which generated
$1,120,685 of profit for the Roughriders. In addition, in 2003 the Roughriders
hosted the 91st Grey Cup which generated $1,911,777 of profit for the
Roughriders. For both Grey Cups the Roughriders were not required to pay a
portion of the profits to the City.
In addition, the Roughriders have generated net profits from concert events held at
Mosaic Stadium, being the Rolling Stones Bigger Bang Tour concerts, and most
recently the AC/DC Black Ice World Tour concert. These concert events generated
total net profits of $405,126 for the Roughriders. The City received commission
payments totaling $137,186 on concession sales for these events.
E) Other material aspects to the relationship
We also noted the following material aspects to the relationship:

In order to address the space constraints of Mosaic Stadium the Roughriders
have entered into additional non-stadium leases for Roughrider business
operations, including business office space, warehouse space and a fitness
facility. The current annual base rent for these additional leases total $207,200.
The total projected capital costs and leasehold improvements for the fitness
facility are $480,000. The fitness facility is expected to be ready for use by
December 2009.

The Roughriders provide the University of Regina Rams (the “Rams”) with full
access to Mosaic Stadium and adjoining areas for the sale of 50/50 tickets at
all Roughrider home games. In exchange, the Rams pay the Roughriders an
annual facility rental charge. It is our understanding that during the twelve
month periods ended December 31, 2007 and 2008 respectively, the
Roughriders received cash of $80,633 and $123,785 from the Rams for the
50/50 facility rental charges. It is also our understanding that the Roughriders
donated $100,000 of the $123,785 collected in 2008 to support the University
of Saskatchewan Huskies, Saskatoon Hilltops, Regina Prairie Thunder and
Football Saskatchewan ($25,000 each).

Over the years, non-profit organizations have been given the opportunity to
fundraise by working for the organizations that sell concessions at the
stadium. In addition, the Roughriders pay honorariums to the Regina Lions
Band for ticket taking.
3
Scope of the analysis and key
project activities
Scope
The government of Saskatchewan, through CIC, is undertaking a feasibility study
into the construction of a new all weather multipurpose entertainment facility in
central Regina. The Roughriders would be expected to be a major tenant of the
facility. As a result, it is necessary that the feasibility study considers all major
aspects of the lease and business relationship between the City and the
Roughriders.
CIC engaged KPMG LLP to analyze the existing business relationship between the
Roughriders and the City including:

Examine all aspects of the existing Mosaic stadium lease and arrangements
for parking revenues, concessions, and food services;

Examine the rights and obligations of the Roughriders in relation to the existing
stadium naming rights agreement;

Examine historic and contractual relationships and practices between the City
and the Roughriders, in relation to capital contributions to Mosaic Stadium and
tenant leasehold improvements, if applicable;

Examine the historical financial relationship between the Roughriders and the
City, in relation to special events such as periodically hosting the Grey Cup;

Identify and examine any other material aspects of the financial relationship
between the Roughriders and the City that are not otherwise listed above; and

Obtain a thorough understanding of the Roughriders’ current business model
including source of revenues and expenses.
Key Project Activities
Inquiries and discussions

We held meetings with CIC and the Roughrider Board Chair and management
to gain an understanding of the scope of our analysis;

We held meetings with Roughrider management to discuss the existing
business relationship with the City and obtain and understand information.
Agreements and documents

We obtained agreements and other documents from Roughrider
management. We reviewed the agreements and documents provided to us
and summarized significant matters.
Financial information

We obtained financial information from Roughrider management with respect
to stadium operations, stadium naming rights, capital contributions and
leasehold improvements, special events, and other matters;

We compiled the financial information provided by Roughrider management.
We have not performed an audit or a review engagement in respect of the
financial information and, accordingly, we express no assurance thereon.
4
Stadium operations
Examine all aspects of the existing Mosaic stadium lease and arrangements for
parking revenues, concessions, and food services.
Obtain a thorough understanding of the Roughriders’ current business model
including source of revenues and expenses.
1) Lease and Licence Agreement
On December 14, 2005 the Roughriders and the City entered into a five year lease
and licence agreement. Under the terms and conditions of the lease and licence
agreement:
o
The annual rent is the lesser of $200,000 or 25% of annual net profits.
All revenues, costs and expenses from any Grey Cup game are excluded
in the calculation of rent under the lease.
o
The Roughriders are also responsible for payment, as additional rent, of all
taxes as may be assessed and imposed by the City from time to time in
its capacity as a taxing authority.
o
The lease and licence agreement is silent with respect to property taxes;
however, Bylaw 2005-82 – The Saskatchewan Roughrider Football Club
Inc. Tax Exemption Bylaw provides a tax exemption for the property
owned by the City of Regina and occupied by the Roughriders, being
Mosaic Stadium. The tax exemption commenced on January 1, 2006 and
ends on December 31, 2009.
o
The City grants to the Roughriders:

A licence to occupy and use the practice field. The City shall, at its
cost, cut, water, aerate, fertilize and mark the practice field, in addition
to, maintenance and repair of the perimeter fencing and storage
building. The Roughriders are responsible for the cost of repairs for all
damage to the practice field caused by the Roughriders from other
than ordinary usage;

A license to occupy the stadium as required on game days and the
right and licence to use the playing field area of the stadium for
purposes of practices and certain special promotions;

The right and licence to occupy on game days, certain parking areas
around the stadium;

The exclusive right to sell food and beverage concessions at the
stadium and the practice field during game days and further during
Junior, High School, and University of Regina Rams football games
and special events. This does not apply to community events
sponsored or promoted by the City at the facility;

A license to use and occupy the club seating areas; and

An exclusive licence to sell souvenirs and retail products in respect to
the retail sales area as shown in the agreement.
5
o
The City pays all charges with respect to utility services, excluding
telephone services, and subsequently invoices the Roughriders for their
proportionate share. This includes electricity, natural gas, water and sewer
charges and drainage levies.
o
The City is responsible for:

Structural repairs to the “premises” except the structure supporting
the eastside club seating and all other improvements constructed by
the Roughriders. The premises as defined in the lease and licence
agreement as the portion of the stadium and the improvements that
have been authorized by the City that is used and exclusively
occupied by the Roughriders in relation to office space and its day–to–
day football operations. This includes administrative and coaching
offices, the Roughriders team’s dressing room, weight room, physio
room, therapist’s office, film room and retail sales outlet, storage
area, alumni lounge, green & white lounge, food concession areas,
and certain parking spaces for the exclusive use of the Roughriders.

Maintenance with respect to practice field, the synthetic turf, as well
as structural components and mechanical systems at the facility,
excluding the mechanical systems at the premises and the
mechanical and structural components of club seating; and

Maintaining the seating and landscaping and all necessary cleanup
and maintenance other than respect to the premises.
o
The Roughriders shall not make or erect improvements without
submission to and approval by the City. Except as otherwise agreed by
the City in writing, all improvements made by the Roughriders become
the City’s property, without compensation to the Roughriders upon
termination or expiration of the lease. All improvements shall be
maintained and repaired by the Roughriders. No improvements can be
removed by the Roughriders without approval from the City.
o
The Roughriders may occupy the facility or portions thereof for the
purpose of conducting special events, in accordance with the conditions
of approval of each special event established by the City under Bylaw No.
2005-79 being The Taylor Field Sale and Consumption of Alcohol
Authorization Bylaw, 2005 (No. 2). Alcohol sales are also governed by
Bylaw 2005-79.
o
The Roughriders are responsible for the cost of all necessary and
adequate security for all games and other events held on the premises
sponsored by or under the control of the Roughriders.
o
The lease and licence agreement includes the following provisions with
respect to playing field and facility upgrades:

The City agrees it shall allocate, to the cost of playing field and
stadium upgrades, all rents received by the City during the term of the
agreement, excluding additional rents;

The City Manager may approve to exclude the proceeds received
from special fund-raising efforts conducted by or on behalf of the
6
Roughriders for authorized capital improvements from the calculation
of annual rent;
o

The City and the Roughriders agree that the two dollar surcharge on
game admission tickets shall be used exclusively for capital
improvements (Note that the surcharge was increased to three dollars
in 2008). It is our understanding that the surcharges belong to the
Roughriders and under the terms of the lease and license agreement
the Roughriders have agreed to use them exclusively for capital
improvements; and

The City agrees that if the existing turf is sold for value, any significant
proceeds will be contributed towards the cost of the new turf.
The Roughriders agree to secure and maintain a $5,000,000 general
liability insurance policy and $500,000 tenant’s legal liability insurance. The
Roughriders pay all premiums and other moneys for maintaining the
insurance and assign to the City the benefit of all policies and contracts of
insurance which covers the premises.
It is important to note that the Roughriders are the principal tenant of the stadium
and as such they generally have unrestricted access to the stadium, the playing
field area of the stadium and the practice field.
2) Financial information with respect to stadium operations
The following provides analysis with respect the financial impacts of the lease and
business relationship between the Roughriders and the City related to stadium
operations.
KPMG examined two different years, 1997 and 2007, to explore the financial
impact of the lease and business relationship under what might be termed worst
case and best case financial scenarios.
The following financial information was provided by the Roughriders. We have not
performed an audit or a review engagement with respect to the financial
information and, accordingly, we express no assurance thereon.
1) Merchandise
Under the Lease and Licence Agreement with the City the Roughriders have the
exclusive licence to sell souvenirs and retail products in respect to the retail sales
area as shown in the agreement.
The Roughriders sell merchandise through the Rider Store located at the stadium
and stores located in malls in both Regina and Saskatoon. The following table
relates to merchandise sold at the Rider Store only. The Roughriders track sales by
each individual store but not costs. As a result, in order to estimate the
merchandise costs related to the Rider Store, we applied the overall net profit
percentage earned on merchandise sales as a whole (31% in 2007 and 11% in
1997).
Merchandise sales (stadium only)
(unaudited)
2007
1997
Sales
$3,685,173
$552,708
Costs
2,542,769
491,910
$1,142,404
$60,798
Net profit
7
2) Concessions
Under the Lease and Licence Agreement with the City the Roughriders have the
exclusive right to sell food and beverage concessions at the stadium and the
practice field during game days and further during Junior, High School, University
of Regina Rams football games and special events (excluding community events
sponsored by the City).
For 37 years the Roughriders had a Concession Agreement with Rider Snack (Earl
and Lyn Stuart) for provision of concession services. Under the last agreement
with Rider Snack, which expired in 2007, the Roughriders granted the
concessionaire exclusive concession rights for the stadium, practice field and club
seating areas in return for:

32% of gross sales for home games under 24,000 and 34% for over
24,000;

25% of gross sales for all other events at the stadium and practice
field events; and

10% of gross sales for East Club Seating and 0% for West Club
Seating.
In 2008, the Roughriders engaged Aramark Canada Ltd. (“Aramark”) on a one year
renewable contract to provide management services for the stadium, practice field
and club seating concessions. Aramark receives a management fee of 8.5% of
total sales.
The Roughriders also have an agreement with Aramark through 2011 to provide
alcohol concession services for the stadium and services for the Green & White
Lounge. The management service fee for alcohol concession services is 10% of
alcohol sales and the management fee for the Green & White Lounge is $12,000
per annum. The Roughriders incur all costs associated with providing alcohol
concessions and Green & White Lounge services. The following table provides
some details with respect to concession sales.
Concession sales
(unaudited)
Sales
2008-09 (note 1)
2007
1997
$3,355,376
$2,081,399
$762,310
Costs
Alcohol & Food (note 2)
1,037,662
574,942
151,280
Labour
270,431
39,723
23,386
Commissions
569,946
299,502
89,231
82,856
112,947
82,658
$1,394,481
$1,054,285
$415,755
Other
Net profit to the Roughriders
Note 1 – Relates to the 12 month period ended December 31, 2008. Concession
information for this period is being included at it was the first year of the
concession agreement with Aramark.
Note 2 – For 2007 and 1997 the concessions were operated under the agreement
with Rider Snack. Under this agreement, the Roughriders paid for alcohol but did
8
not pay for food, but instead received a percentage of gross revenues from Rider
Snack.
There are also food and alcohol sales and expenses associated with the Green and
White lounge. These amounts are not included in the above information but are
outlined in the other stadium operations table on page 10.
3) Sponsorships and signage
The Roughriders generate revenues from sponsorships and signage. In 2007, the
total sponsorship and signage revenue was $3,414,146 compared to $386,000 in
1997. The current lease and license agreement is silent with respect to in-stadium
sponsorships and signage. The Roughriders do not pay any portion of in-stadium
sponsorship and signage revenues to the City.
Sponsorships and signage revenue
(unaudited)
2007
1997
410,000
$239,000
926,212
-
1,565,434
147,000
SaskTel and DirectWest sponsorship (note 3)
325,000
-
Annual Mosaic sponsorship (does not include portion
placed into Stadium Improvement Fund – see page 14)
187,500
Local radio and television rights
$
Non-monetary sponsorships (note 1)
Other sponsorships (note 2)
Total
$ 3,414,146
$386,000
Total sponsorship and signage costs were $310,657 in 2007 and $6,026 in 1997.
Note 1 – Data not available for 1997
Note 2 – It is our understanding that a portion of these sponsorship revenues
relate to in-stadium signage, promotions and video board advertising. Due to the
nature of sponsorships, it our understanding that the Roughriders will often charge
one fee in exchange for both in-stadium signage, promotions and video board
advertising and other sponsorship activities. As a result, the Roughriders were not
able to provide information on the value of in-stadium signage.
Note 3 – $100,000 relates to a ten year, $1,000,000 sponsorship agreement with
SaskTel for the MaxTron. The remaining $225,000 relates to annual sponsorship
fees related to in-stadium signage and other sponsorship activities.
4) Parking
Under the Lease and Licence Agreement with the City the Roughriders have the
right and licence to occupy on game days, certain parking areas around the
stadium. The following revenues were generated from parking in 2007 and 1997.
Parking revenue
(unaudited)
Parking
2007
1997
89,374
39,150
9
5) Payments to the City
The Roughriders pay the City for various expenses under the terms and conditions
of the Lease and Licence Agreement. This includes stadium rent, stadium utilities,
certain repairs and maintenance and other costs. Per review of the financial
information provided by the Roughriders, the following expenditures were paid to
the City in 2007 and 1997.
Amounts paid to the City (stadium only)
(unaudited)
Rent (not including GST)
Utilities
1997
2007
$200,000
$
-
175,186
110,403
Other
15,484
16,134
Total
$390,670
$126,537
In addition, in 2007, the Roughriders paid $599,545 to the City for the Roughriders’
portion of costs for the FieldTurf. Note that the City does have turf signage on the
FieldTurf (“I Love Regina” logo in the south end zone). No amounts have been
paid by the City to the Roughriders for this turf signage.
6) Other stadium operations
The following table illustrates other revenues derived and costs incurred from
operating the stadium under the existing lease agreement. Facility fees are
addressed on page 14 and in-stadium concessions were previously described on
page 8.
Stadium operations (unaudited)
2007
1997
Revenue:
Ticket sales
$8,357,284
$4,068,355
Club seating
346,972
*
Membership
155,462
**
Alcohol and food
138,102
**
Video board operation
195,684
-
Security
180,584
50,990
Utilities
175,186
110,404
55,733
4,298
143,155
14,348
Food and Alcohol
58,343
**
Aramark fee
13,782
**
Labour
30,891
**
Other
11,127
**
Green and white lounge
Expenses:
Maintenance and renovations
Other game day expenses
Green and white lounge
* - Club seating is included in ticket sales for 1997
** In 1997 the Green and White Lounge information was lumped in with the other
income and expenses
10
Stadium naming rights
Examine the rights and obligations of the Roughriders in relation to the existing
stadium naming rights agreement
On June 23, 2006, the Roughriders and Mosaic Canada (“Mosaic”) entered into a
Sponsorship Agreement expiring on December 31, 2015. In exchange for an
annual sponsorship fee of $375,000 the Roughriders granted Mosaic certain
sponsorship rights, most notably, naming rights to Mosaic Stadium which includes
signage on the exterior of the stadium and turf signage.
On June 26, 2006, City of Regina council adopted a resolution to endorse the
Mosaic sponsorship for the revitalization and renewal of Mosaic Stadium in
principle and authorized the Roughriders to name the stadium Mosaic Stadium for
the period of ten years effective on or about June 23, 2006.
On August 31, 2006 the Roughriders and the City entered into an agreement to
formally permit the stadium to be named Mosaic Stadium and to consent to the
turf and stadium signage. In addition, the Roughriders agreed to use a minimum of
one half of the sponsorship fees to assist in improving the football facilities, ticket
office, Riders’ store, business offices and enhanced seating. It was also agreed
that after the expiration of three years of the agreement, the parties would
determine whether the one half minimum funding required adjustment.
Per review of financial statements and discussion with Roughrider management, it
is our understanding that in the first three years of the agreement with the City the
Roughriders allocated $187,500 per year (half of the $375,000 annual sponsorship
fee) to the Stadium Improvement Fund (established in 2005 for the purpose of
stadium renewal, including the purchase of property, plant and equipment relating
to the facility). It is also our understanding that after the expiration of three years of
the agreement, the Roughriders and City determined that the one half minimum
funding requirements would no longer be required.
The Sponsorship Agreement includes a “first refusal rights” clause that states at
least twelve months prior to the expiration of the term of the agreement the
Roughriders shall negotiate in good faith and first with Mosaic regarding the
renewal of the agreement upon substantially the same terms and conditions with
the exception of the sponsorship fee payable.
The Sponsorship Agreement contains cancellation, default and termination clauses
but does not specifically contemplate a scenario of the Roughriders moving into a
new stadium.
11
Capital contributions and leasehold
improvements
Examine historic and contractual relationships and practices between the City and
the Roughriders, in relation to capital contributions to Mosaic Stadium and tenant
leasehold improvements, if applicable
The Roughriders hosted the Grey Cup for the first time in 1995. In order to host
the Grey Cup a number of renovations were needed to meet CFL requirements.
The press box area located on the west stands was renovated as a VIP area for
purposes of the Grey Cup and was subsequently transformed into corporate club
seating. In addition, the east club seating area was built on top of the east side
stands. The Roughriders were responsible for the construction and payment of the
Eastside club seating.
In 2000 the OmniTurf was replaced with AstroTurf. The City and the Roughriders
shared the costs of the AstroTurf. In order to fund their share of the costs, the
Roughriders were able to secure donations from various corporations totaling
$794,627. The entire amount was paid to the City.
In 2005 the SaskTel MaxTron was installed to improve the fan game experience.
The cost of the MaxTron was $946,301 and was paid for by the Roughriders;
however, the costs were offset by payments received as a result of sponsorship
agreement between the Roughriders, Saskatchewan Telecommunications and
DirectWest. Furthermore, in 2005, a new media tower was installed and paid for
by the Roughriders as well as many improvements to the eastside concessions
and press box. Further improvements were made by the Roughriders to the club
seating in 2006.
The field playing surface was upgraded again in 2007 when FieldTurf was installed
with the Roughriders paying for a portion of the cost, being $599,545.
Also, in 2007 the Roughriders paid for the “Leader-Post” video board located in
the north end zone at a cost of $224,840, as well as significant improvements to
club seating, stadium signage, locker rooms, concessions and the Rider Store.
The Roughriders have also paid for various leasehold improvements over the
years.
Stadium Capital Additions (1995-2004)
The following table outlines the significant capital expenditures paid for by the
Roughriders from 1995 through 2004 prior to the Stadium Improvement Fund
being established in 2005. There were no significant additions in this time period
with the exception of the eastside club seating which was constructed for the
1995 Grey Cup.
12
Stadium Capital Expenditures (1995-2004)
(unaudited)
1995

Eastside club seating construction and Westside club seating renovation
1996 -1998

None *
$1,275,808
-
1999

Leasehold improvements – Office, Green and White Lounge and
Concourse
33,959
2000

Leasehold improvements – Office, Green and White Lounge and
Concourse

AstroTurf**
34,315
794,627
2001

Leasehold improvements – Office, Green and White Lounge and
Concourse
46,904
2003

Leasehold improvements – Office, Green and White Lounge and
Concourse
33,167
2004

Leasehold improvements – Office, Green and White Lounge and
Concourse
Total Stadium Additions 1995-2004
63,964
$ 2,282,744
* During 1996-1998 there were capital additions, per the audited financial
statements, however these additions did not relate to the stadium as they related
to computer, video, weight room and ticket office equipment.
** The City and the Roughriders shared the costs of the AstroTurf. In order to fund
their share of the costs, the Roughriders were able to secure donations from
various corporations totaling $794,627 which were then paid to the City.
13
Stadium Improvement Fund (including internally restricted net assets)
The Stadium Improvement Fund, originally called the Centennial Fund, was
established in 2005 for the purpose of stadium renewal, including the purchase of
property, plant and equipment relating to the facility. Facility fees and other
contributions restricted for this purpose are allocated to this fund. In 2005 facility
fees were comprised of a two dollar surcharge on certain game admission tickets.
In 2008 these fees were increased to three dollars. The following table illustrates
amounts contributed to the fund and amounts spent.
2005
2006
2007
Stadium Improvement Fund
2008-09
(15 month
period)
(note 3)
Total
(unaudited)
Contributions:
Facility fees
SaskTel sponsorship
Harvard sponsorship (note 1)
Mosaic sponsorship
Loan forgiveness (note 2)
494,678
1,000,000
1,055,000
2,800,000
468,908
187,500
-
459,686
187,500
-
832,000
187,500
-
2,255,272
1,000,000
1,055,000
562,500
2,800,000
Total contributions
5,349,678
656,408
647,186
1,019,500
7,672,772
946,301
197,996
68,562
183,384
218,229
46,564
83,957
10,584
4,348
175,007
126,627
24,842
27,181
224,840
18,820
132,569
26,589
95,587
599,545
-
25,000
25,000
15,558
-
1,171,141
281,953
79,146
231,552
218,229
25,000
190,565
259,196
24,842
26,589
95,587
599,545
73,745
1,661,036
452,546
1,097,950
65,558
3,277,090
$3,688,642
$203,862
$ (450,764)
$953,942
$4,395,682
Capital Purchases:
Scoreboard
Concessions
Locker room
Club seating and press box
North media tower
Green & White Lounge
South end zone
Stadium façade & signage
Stadium signage
Concourse lighting
Stadium redevelopment
FieldTurf
Miscellaneous and consulting
Total capital purchases
Total Unspent Contributions
Note 1 – $1,000,000 of this contribution was made by Harvard in exchange for the
exclusive naming rights to the Green and White Lounge. The additional $55,000
was to fund the construction of a new camera platform in the north end-zone of
the stadium.
Note 2 - Note that on March 29, 2005, the Government of Saskatchewan forgave
the loan to the Roughriders in the amount of $2,800,000. In 2005, the Roughriders
internally restricted the $2,800,000 for stadium improvements.
14
Note 3 - During 2006 through 2009 there were capital purchases that did not get
accounted for under the Stadium Improvement Fund which appear to be related to
the common areas of the stadium. These include:

2006 - $25,000 for stadium signage, $46,000 for club seating and $41,000 for
camera platforms

2007 - $212,000 for locker room renovations, $72,000 for concession
equipment buyout, and $39,000 for west side level 2 concession renovations

2008-2009 - $102,000 for concessions, $53,000 for locker rooms, and $49,000
for concession and stadium operations offices
These capital purchases total $639,000.
Overall, the Roughriders have made stadium capital expenditures totaling
$6,198,834 since 1995:



1995 to 2004 - $2,282,744
2005 to 2009 (Stadium Improvement Fund) - $3,277,090
2005 to 2009 (Note 3 above) - $639,000
15
Special events
Examine the historical financial relationship between the Roughriders and the City
in relation to special events such as periodically hosting the Grey Cup.
Under the terms of the Lease and Licence Agreement the Roughriders may
occupy the facility or portions thereof for the purpose of conducting special events,
in accordance with the conditions of approval of each special event established by
the City under Bylaw No. 2005-79 being The Taylor Field Sale and Consumption of
Alcohol Authorization Bylaw, 2005 (No. 2) (the “Bylaw”). Per review of the bylaw,
“Special Event” means all exhibitions, promotions, entertainment,
performances, or athletic competitions (excluding Home Games) at which
the sale and consumption of beverage alcohol is proposed, conducted
with the prior approval of the City Manager or his designate. Beverage
Alcohol may be sold and consumed at Taylor Field:
(a)
at any Special Event, provided that there shall be no more than
six Special Events during any calendar year; and
(b)
by or on behalf of the Saskatchewan Roughrider Football Club,
the University of Regina Rams or the Regina Thunder Football
Club at any Home Game;
The City Manager is hereby authorized to consider and in his judgment to
approve or deny applications for Special Events. The City Manager is
further authorized to delegate such authority to a department head,
manager or supervisor of that civic department charged with the operation
and maintenance of Taylor Field.
A number of special events have been held at Mosaic Stadium including the 1995
and 2003 CFL Grey Cups, the Rolling Stones Bigger Bang Tour concerts, and most
recently the AC/DC Black Ice World Tour concert. These events have provided
both financial and non-financial benefits to the City. In addition, these events have
provided financial benefits to the Roughriders through profits made on the 1995
and 2003 Grey Cups and the sale of merchandise, concessions, and parking. The
following examines the historical financial relationship between the Roughriders
and the City in relation to special events.
A) 1995 Grey Cup
In 1995 the Roughriders (supported by financial guarantees from the Province of
Saskatchewan), hosted the 83rd Grey Cup. Per review of the Roughriders’ 1995
and 1996 audited financial statements the event generated $1,120,685
($1,309,918 of profit accounted for in 1995 and $189,233 of losses accounted for
in 1996) for the Roughriders. The Roughriders were not required to pay a portion of
the profits to the City.
B) 2003 Grey Cup
The Roughriders (supported by financial guarantees from the Province of
Saskatchewan), hosted the 91st Grey Cup in 2003. Per review of the Roughriders’
2003 and 2004 audited financial statements the event generated $1,911,777
16
($2,002,205 of profit accounted for in 2003 and $90,428 of losses accounted for in
2004) for the Roughriders. The Roughriders were not required to pay a portion of
the profits to the City.
C) Rolling Stones Bigger Bang Tour Concerts
In October 2006, the Roughriders partnered with the City and Ipsco Place to
present two Rolling Stone’s concerts at Mosaic Stadium as part of their Bigger
Bang concert tour. It is our understanding that as part of these concerts there was
an agreement to share concession profits equally (33.3%) amongst the
Roughriders, Aramark Canada Ltd., and Regina Exhibition Association Ltd. Profits
were defined as gross receipts less the sum of (a) cost of operations and (b)
commission payments made to subcontracted service provides, the concert
promoter, and the City of Regina. The City of Regina received a 11.5%
commission on total sales. Furthermore, the Roughriders received 10% of all
merchandise sales in exchange for the physical selling, reconciliation, and other
services.
Overall, the Roughriders earned $247,543 related to the Rolling Stones Bigger
Bang Tour concerts after a commission payment to the City of $101,292.
D) AC/DC Black Ice World Tour Concert
In August 2009, AC/DC held a concert at Mosaic Stadium as part of their Black Ice
World Tour concert tour. Consistent with the Rolling Stones concerts, it is our
understanding that there was an agreement to share concession profits equally
(33.3%) amongst the Roughriders, Aramark Canada Ltd., and Regina Exhibition
Association Ltd. Profits were defined as gross receipts less the sum of (a) cost of
operations and (b) commission payments made to subcontracted service provides,
the concert promoter, and the City of Regina. The City of Regina received 5% and
7.5% commission payments on food and alcohol sales respectively. Furthermore,
the Roughriders received 20% of all merchandise sales in exchange for the
physical selling, reconciliation, and other services.
Overall, the Roughriders earned $157,583 related to the AC/DC Black Ice World
Tour concert after a commission payment to the City of $35,894.
The following table shows the total net profits earned by the Roughriders and
commissions paid to the City on these special events.
Special events (unaudited)
Net profits to Roughriders
1995 Grey Cup
2003 Grey Cup
Rolling Stones Bigger Bang Tour
AC/DC Black Ice World Tour
Total
$ 1,120,685
1,911,777
247,543
157,583
3,437,588
Commissions to the City
Rolling Stones Bigger Bang Tour
AC/DC Black Ice World Tour
Total
101,292
35,894
137,186
17
Other material aspects of the
relationship
Identify and examine any other material aspects of the financial relationship
between the Roughriders and the City that are not otherwise listed above
1) Additional non-stadium leases related to Roughrider business operations
In order to address the space constraints of Mosaic Stadium the Roughriders have
entered into additional leases. In March 2008, the Roughriders secured a lease for
office space located outside of Mosaic Stadium. It provides approximately 5,200 of
finished square feet on the main floor and 1,900 of finished square feet in the
basement. The lease is for three years and is renewable by one year increments.
The annual base rent is $115, 920. The total leasehold improvements incurred
were $65,992.
In May 2008 the Roughriders entered into a lease for offsite warehouse space for
annual rent of $37,200. Furthermore on July 15, 2009, the Roughriders entered
into a lease for a fitness facility for annual rent $54,080, not including operating
costs. The total projected capital costs and leasehold improvements for the fitness
facility are $480,000. The fitness facility is expected to be ready for use by
December 2009.
2) University of Regina Ram’s (the “Rams”) 50/50 Draw
The Roughriders provide the Rams with full access to Mosaic Stadium and
adjoining areas for the sale of 50/50 tickets at all Roughrider home games, both
prior to and during game times.
Under the terms of the current agreement between the Roughriders and the
Rams, the Rams have agreed to pay the Roughriders, as an annual facility rental
charge, an amount equal to:
a) 14% of gross sales on the first $300,000 of gross sales
b) 19% of gross sales on the next $200,000 of gross sales
c) 25% of gross sales on sales over $500,000
Of these facility rental charges $22,000 (including taxes) will consist of a
combination of Roughrider ticket packages, shares and merchandise as may, at the
Roughrider’s option in consultation with the Rams, be suitable for subsidiary
prizing. The remaining balance will be paid in cash.
It is our understanding that during the twelve month periods ended December 31,
2007 and 2008 respectively, the Roughriders received cash of $80,633 and
$123,785 from the Rams for the 50/50 facility rental charges. It is also our
understanding that the Roughriders donated $100,000 of the $123,785 collected in
2008 to support the University of Saskatchewan Huskies, Saskatoon Hilltops,
Regina Prairie Thunder and Football Saskatchewan ($25,000 each).
18
3) Volunteer honorariums
Over the years, non-profit organizations have been given the opportunity to
fundraise by working for the organizations that sell concessions at the stadium.
Although this arrangement is not specifically addressed in the current concession
agreement with Aramark and the former concession agreement with Rider Snack,
it is our understanding that Aramark (as did Rider Snack) pays certain non-profit
organizations (by way of an honorarium) in exchange for working at the concession
booths. The Roughriders do not have information on the quantum of the
honorariums.
It is also our understanding that the Roughriders pay honorariums to the Regina
Lions Band for ticket taking. In 2008 the Roughriders paid $11,000 for ticket taking
at all home games, including the home playoff game.
19
CrownInvestmentsCorporation
ofSaskatchewan
AnalysisofaPossibleBusinessRelationship
betweentheSaskatchewanRoughriderFootball
ClubInc.andaNewMulti-PurposeEntertainment
FacilityinRegina
Phase2Report
February10,2010
TableofContents
Executive summary
1
Scope of the analysis and key project activities
6
Analysis of current and representative business relationship 7
Appendix A: Sensitivity analysis
20
Executivesummary
This report contains the results of phase 2 of our project to assist Crown
Investments Corporation of Saskatchewan (“CIC”) in performing an analysis of a
possible business relationship (the “Representative Business Relationship”)
between the Saskatchewan Roughrider Football Club Inc. (the “Roughriders”) and a
new multi-purpose entertainment facility (the “Facility”) in Regina.
The Representative Business Relationship outlined in this report is meant to provide a
framework within which the impact of the Facility on the financial health of the
Roughriders could be examined. The assumptions and overall model do not represent
any form or type of agreement or understanding between the parties involved and an
actual lease agreement would need to be negotiated between the Roughriders and the
operator of the Facility if the Facility proceeds to construction and could represent
more or less risk sharing amongst the parties.
Representative Business Relationship
Thefollowingsummarizesthepossiblefinancialimpactsofapotentialleaseandbusiness
relationshipbetweentheRoughridersandtheoperatoroftheFacilityrelatedtorevenuesand
expensesthatwouldbedeterminedinaccordancewiththepotentialleaseandbusiness
relationshipandforthisanalysisisreferredtoasStadiumOperations.
TheRepresentativeBusinessRelationshipisbasedoninitialassumptionsprovidedbyGlobal
SpectrumintheirProForma(“ProForma”)financialinformationandmodifiedthrough
discussionswithCIC,theRoughridersandtheCityofRegina.
Paidattendanceisakeyassumptionasitdirectlyimpactsgeneralseating,clubseating,
suites,commissionsonthesaleofclubseatsandsitesmerchandisesalesandcosts,
concessionandcateringcommissions,parking,facilityfeesandfacilityrent.Inaddition,
pricingovertickets,concessions,cateringandfacilityfeesimpactsanumberofrevenues
andexpenses.
It is important to note that the Representative Business Relationshipincludes a
home playoff game. Appendix A summarizes the sensitivity of the Representative Business
Relationship to changes in assumptions.
1
The following table provides a comparison to the lease and business relationship with
respect to Mosaic Stadium between the Roughriders and the City for the period ended
March 31, 2008-09 and the year ended December 31, 2007.
Stadiumoperations
(unaudited)
Revenue
Generalseating
Clubseating
Representative
Business
Relationship
2008-09
2007
$12,790,278
$9,363,094
$8,357,284
1,374,450
430,748
346,972
Suites
371,250
-
-
Commissionsonsaleofclubseatingandsuites
841,410
-
-
2,355,000
500,000
2,938,086
-
2,487,934
-
4,117,173
4,117,173
3,685,173
-
3,355,376
2,081,399
Sponsorships,signageandnamingrights
Commissionsonsaleof sponsorshipsandsignage
Merchandise
Concessions
Concessionandcateringcommissions
GreenandWhiteLounge
Parking
Facilityfees(note2)
Total revenue
741,928
-
-
-
326,838
293,564
22,000
1,826,286
83,485
832,000
89,374
459,686
24,939,775
21,446,800
17,801,386
3,046,708
3,046,708
2,542,769
-
1,960,895
1,027,114
Expenses
Merchandise
Concessionsandcatering
Sponsorshipsandsignage(note1)
1,998,690
298,923
310,657
Rent
1,744,317
200,000
200,000
Videoboardoperation
-
224,499
195,684
Security
-
216,957
180,584
Utilities
-
292,015
175,186
GreenandWhiteLounge
-
119,719
114,143
1,826,286
8,616,001
832,000
7,191,716
459,686
5,205,823
16,323,774
(12,626,477)
14,255,084
12,595,563
Netexpensesrelatedtonon-stadiumoperations(note3)
(12,626,477)
(10,841,914)
Roughrider net income
$ 3,697,297
Facilityfees(note2)
Total expenses
Revenues in excess of expenses from Stadium
Operations
$
1,628,607
$ 1,753,649
Note 1–BasedoninformationprovidedbyGlobalSpectrum,typicallythecostof
ticketsincludedinsponsorshippackagesisrecordedasticketrevenuewiththerelated
costbeingrecordedwithinsponsorshipandsignagecosts.In2008-09and2007the
Roughridershavenotincludedgeneralandclubseatingticketsincludedinsponsorship
packagesinrevenuefromgeneralandclubseating.Basedoninformationprovidedby
theRoughridersithasbeenassumedthat12%oftheavailablegeneralandclubseats
areusedinsponsorshippackagesforacostof$1,699,767($14,164,728totalsalesx
12%).Inaddition,ithasbeenassumedthattheRoughriderswillincurcostssimilarto
thoseincurredin2008-09tosellsponsorshippackageswhichwere$298,923.
2
Note 2-TheStadiumImprovementFund,originallycalledtheCentennialFund,was
establishedin2005forthepurposeofMosaicStadiumrenewal,includingthepurchase
ofproperty,plantandequipmentrelatingtoMosaicStadium.In2008-9and2007
facilityfeesandothercontributionsrestrictedforthispurposewereallocatedtothis
fund.UnderaRepresentativeBusinessRelationshipGlobalSpectrumhasassumed
thatallfacilityfeesgeneratedareforthebenefitoftheFacilityandnoamountwould
beprovidedtotheRoughriders.
Note 3–Ithasbeenassumedthatthenetexpensesrelatedtonon-stadiumoperations
undertheRepresentativeBusinessRelationshipissimilarto2008-09.
Graphic presentation of Roughrider Stadium Operations
ThefollowingdepictstheactualRoughrider’srevenues,expensesandrevenuesover
expensesrelatedtostadiumoperationsunderthecurrentbusinessrelationshipfor
2007and2008-09anditdepictstheestimatedfinancialimpactoftheFacilitytothe
RoughridersundertheRepresentativeBusinessRelationshipaswellasscenarios2,3
and4asoutlinedinAppendixA.
$35,000,000.00
$32,500,000.00
$30,000,000.00
$27,500,000.00
$25,000,000.00
$22,500,000.00
$20,000,000.00
$17,500,000.00
$15,000,000.00
$12,500,000.00
$10,000,000.00
$7,500,000.00
$5,000,000.00
$2,500,000.00
$0.00
2007
2008-09
Revenues
Representative
Business
Relationship
Scenario 2
Revenues over Expenses
Scenario 3
Scenario 4
Expenses
3
Key project activities
InthefollowinganalysisofthecurrentandRepresentativeBusinessRelationshipand
incorporatedthereinwe:
•
useddataandanalysisprovidedbyGlobalSpectrumandotherapplicableindustry
sourcesandidentifiedrelevanttypicaltermsandconditionsforsportsteam
stadiumleasesandbusinessrelationships;
•
identifiedandquantifiedotheropportunitiesandexpensesintheFacility;
•
identifiedpotentialbusinessmodelswithinthesportsandentertainmentindustry
andtheirapplicabilitytoapotentialnewrelationship;
•
assessedtheextenttowhichanewleaseandbusinessrelationshipbetweenthe
stadiumentitycanbemodeledonatypicalcommercialmodel;
•
heldmeetingswithCIC,theRoughriderBoardofDirectorsandmanagementand
theCityofReginatoobtaininputandinformationforouranalysisandtoassistin
analyzingtheinformationprovidedbyGlobalSpectrum;and
•
helddiscussionswithGlobalSpectrumwithrespecttotheirdataandanalysis.
Framework agreement
InforminganewrelationshipbetweentheRoughridersandtheFacilitytherearea
numberofprinciplesthatneedtobeagreedoninordertoreachaframework
agreementthatultimatelyleadstoafullydevelopedandexecutedleaseagreement
betweentheRoughridersandtheFacility.
Theseprinciplesincludeandareincorporatedintotheassumptionsusedinpreparing
theRepresentativeBusinessRelationshipassummarizedintheExecutiveSummary
onpage2andwillincludeagreementon:
1)
seatingcapacityandconfiguration(includinggeneralseating,clubseatingand
suites)tooptimizerevenuepotentialtotheRoughridersandtheFacility;
2)
minimumpricingforgeneralseating,clubseatingandsuitesandonthe
amountduetheRoughridersforgamedayticketsincludedinclubseatingand
suites;
3)
whoissolelyorprimarilyresponsibleforsalesofclubseatsandsuitesand
thatapercentagewillbepaidascommissionsonsalesofclubseatsand
suitesandwhoelsewouldbepermittedtosellthese;
4)
whosellssponsorshipsandadvertisingpackages(andonstadiuminventory
thatisavailableforsaleinsponsorshipandadvertisingpackages)andthata
percentagewillbepaidascommissions;
5)
revenuesfromfacilitynamingrightswillbeforthebenefitsolelyofthe
Facility;
6)
theassumptionthatRoughridersdonotpayanyfeesrelatedtomerchandise
salesintheFacility;
7)
concessioncommissionstoRoughriderstobeapercentageofgross
concessionsalesatRoughriderevents;
8)
cateringcommissionstoRoughridersfromsaleofconcessionsinsuitestobe
apercentageofgrosscateringsalesatRoughriderevents;
9)
theRoughriderswouldreceiveapercentageofgamedayparkingrevenue;
10) theamountoffacilityfeeforRoughriderevents(includingGreyCupgames)
andagreementthatfacilityfeeisforthebenefitoftheFacilityandnotthe
Roughridersandthatfacilityfeeischargedonticketsincludedinsponsorship
packages;
4
11) theRoughriderstopayrentbasedonapercentageofgrossticketsales
(includingGreyCupgames)andagreementontypeandlevelofservices
providedandpaidforbytheFacilityincludingsecurity,tickettakers,ushers,
utilities,videoboardoperationsandcleaning;and
12) that50/50drawsareforthebenefitofthebeneficiariesandtheRoughriders.
Conclusion
BasedontheinformationprovidedbyGlobalSpectrum,CIC,theRoughridersandthe
CityofReginaandtheassumptionsagreeduponbyCIC,theRoughridersandtheCity
ofRegina,thesuggestedbusinessmodelasincludedinthecolumntitled
“RepresentativeBusinessRelationship”resultsinatypicalcommercialmodel
betweentheRoughridersandtheFacility.
InadditionandbasedonassumptionsdiscussedandagreedonbyCIC,the
RoughridersandCityofReginatheproposednewbusinessrelationshipbetweenthe
RoughridersandtheFacilitywillmaintainthefinancialsustainabilityoftheRoughriders
andwillallowforincreasedfinancialbenefitstotheRoughridersandtheFacilitybased
onassumptionsregardingattendanceandpricing.
5
Scopeoftheanalysisandkey
projectactivities
Scope
TheGovernmentofSaskatchewan,throughCIC,isundertakingafeasibilitystudyinto
theconstructionofanewallweathermultipurposeentertainmentfacilityincentral
Regina.TheRoughriderswouldbeexpectedtobeamajortenantoftheFacility.
CIChasengagedKPMGLLPtoassistinperformingananalysisofapossiblebusiness
relationshipbetweentheRoughridersandanewmulti-purposeentertainmentfacilityin
Regina.InPhase1oftheengagement,KPMGanalyzedtheexistingbusiness
relationshipbetweentheRoughridersandtheCitywhichislargelybuiltaroundthe
existingleaseagreementforMosaicStadium.
ThescopeoftheanalysisreferredtointheTermsofReference,asdiscussedandagreed
tobyCIC,theRoughridersandKPMGandformsPhase2oftheKPMGanalysisincludes:
•
Identifyandquantifyotheropportunitiesandexpensesinanewfacilityneedingto
beconsideredinanewbusinessrelationship;
•
UsingdataandanalysisprovidedbyGlobalSpectrumandotherapplicableindustry
sourcestoidentifyallrelevanttypicaltermsandconditionsforsportsteam
stadiumleasesandbusinessrelationships;
•
Inadditiontoexaminingallrelevanttypicaltermsandconditionsforsportsteam
stadiumleases,identifypotentialbusinessmodelswithinthesportsand
entertainmentindustry,andtheirapplicabilitytoapotentialnewrelationship;and
•
Assesstheextenttowhichanewleaseandbusinessrelationshipbetweenthe
stadiumentitycanbemodeledonatypicalcommercialmodel,identifyand
quantify,totheextentpossible,wherevariancesfromthemodelmayberequired
toaddressfinancialsustainabilityoftheRoughriders,andoptionsforaddressing
thesevariances.
Key Project Activities
Inquiries and discussions
•
WeheldmeetingswithCIC,theRoughriderBoardofDirectorsandmanagement
andtheCityofReginatoobtaininputandinformationforouranalysisandtoassist
inanalyzingtheinformationprovidedbyGlobalSpectrum;
•
WehelddiscussionswithGlobalSpectrumwithrespecttotheirdataandanalysis.
Financial information
•
WereviewedtheProFormainformationwithrespecttotheFacilityprovidedby
GlobalSpectrum;
•
WeobtainedfinancialinformationfromtheRoughriderBoardofDirectorsand
managementwithrespecttoassumptionsforanewmultipurposeentertainment
facility;
•
WecompiledthefinancialinformationprovidedbyGlobalSpectrumandthe
RoughriderBoardofDirectorsandmanagement.Wehavenotperformedanaudit
orareviewengagementinrespectofthefinancialinformationand,accordingly,
weexpressnoassurancethereon;
•
WegatheredinformationfromtheCanadianFootballLeague(“CFL”)withrespect
tostadiumleases.
6
Analysisofcurrentand
representativebusinessrelationship
KPMGhasreviewedthetermsandconditionsandrelatedrevenuesandexpenses
analyzedinPhase1andcomparedittohowaRepresentativeBusinessRelationship
betweentheRoughridersandtheFacilitymayimpacttheseareas.Toassessthe
financialimpactoftheRepresentativeBusinessRelationshipascomparedtothe
existingbusinessrelationshipwiththeCityofReginarelatedtoMosaicStadium,
KPMGanalyzedtheProFormainformationpreparedbyGlobalSpectrum,modifiedit
throughdiscussionswithCIC,theRoughridersandtheCityofReginaandcomparedit
totwodifferentpreviousyears,2008-09and2007.
Wehavenotperformedanauditorareviewengagementwithrespecttothefinancial
informationand,accordingly,weexpressnoassurancethereon.
It is important to note that the Representative Business Relationshipincludes a
home playoff game.
Appendix A summarizes the sensitivity of the Representative Business
Relationship to changes in assumptions.
1) General seating, club seating and suites
Current business relationship
UnderthecurrentbusinessrelationshiptheRoughridersgeneraterevenuesthrough
generalseatingticketsalesandclubseatingatMosaicStadium.
General seating
ThetotalcurrentpermanentgeneralseatingcapacityofMosaicStadiumis27,924.In
addition,in20082,124temporaryseatswereaddedtoprovidetotalseatingcapacityof
30,048.Ticketpricinglevelsarebasedonrelativepositiontothefield.Ticketpricesdo
notvarydependingonwhetherornotaseatisplacedinthelowerorupperhalfof
MosaicStadium.
In2008,theaveragepaidgeneralseatingattendanceforthepre-seasonandregular
seasonwas24,633.Theaveragegeneralseatingticketpricewasapproximately$29.00
plusfacilityfeesof$3.00perpaidticket.
In2008,thepaidgeneralseatingattendanceforthehomepost-seasongamewas
27,660andtheaveragegeneralseatingticketpricewasapproximately$51.00plus
facilityfeesof$3.00perpaidticket.
Club seating
Currently,thereareclubseatingareaslocatedonboththewestsideandeastside
areasofMosaicStadium.BothWestSideandEastSideClubSeatingareconsidered
premiumseatingareaswithupscaleconcessionitemswhichgenerateadditional
revenuesfortheRoughriders.
Thecurrenttotalclubseatingcapacityis453seats.In2008,theaveragepaidclub
seatingattendanceforthepre-seasonandregularseasonwas300.Perdiscussionwith
Roughridermanagementtheremainingclubseatingwasusedforsponsorshipsandfor
complimentarytickets.Thestandardclubseatingpricein2008was$1,500plus$30.00
offacilityfeeswhichincludespre-seasonandregularseasongames,however,some
seatswerediscountedforgrouppurchasesresultinginanaverageof$1,405perseat
plusfacilityfees.
In2008,thepaidclubseatingattendanceforthehomepost-seasongamewithwas
352andtheticketpricewas$150.00plusa$3.00facilityfee.
7
Suites
MosaicStadiumdoesnotcontainanysuites.Asaresult,theRoughridersdonot
generatethistypeofrevenue.
Representative business relationship
UndertheRepresentativeBusinessRelationshiptheRoughriderswouldcontinueto
generaterevenuesthroughgeneralseatingticketsalesandclubseating.Inaddition,it
isourunderstandingthattheFacilitybeingproposedcontainsanumberofsuites.
BasedoninformationpreparedbyStadiumConsultantsInternationaltheproposed
permanentseatingcapacityforRoughridergamesis33,000intheFacility.The
permanentseatingcapacityof33,000,less255seatsformediaandcoaches,consists
ofthefollowing:
1)Generalseating–30,065(29,270generalseats,525restaurant,270groupsales)
2)Clubseating–1,960
3)Suites–720(40proposedsuiteseachcontaining18seats)
General seating
ItisourunderstandingthattheFacilitywouldhaveanincreasednumberofpermanent
seatsaswellasadditionalcapacityfortemporaryseating.Also,theremaybe
opportunitiestorevisetheticketpricingstructuretoallowformoreflexiblepricing
suchaschargingincreasedpricesforaisleseats.
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
averagepaidgeneralseatingattendanceisapproximately85%ofgeneralseating
capacityforallRoughriderhomegames,includingapost-seasongame.Asaresult,the
averagepaidgeneralseatingattendanceisestimatedtobe25,555,basedongeneral
seatingcapacityof30,065asnotedabove.
TheRoughridershaveperformedananalysiswithrespecttoticketpricingbasedona
revisedpricingstructureintheFacilitywhentheFacilitymightbeavailableforuse.
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
averageticketpricewillbe$45.50,excludingfacilityfees.
ItisestimatedthattheRoughriderswouldreceivetotalannualgrossticketrevenueof
$12,790,278(281,105totalattendancex$45.50)basedontheseassumptions.
Club seating
BasedoninformationpreparedbyStadiumConsultantsInternationaltheFacility
contains1,960clubseats.BasedoninformationprovidedbytheRoughridersithas
beenassumedthat85%ofclubseatswillbesoldor1,666(1,960x85%).
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatclubseats
willbepricedat$1,925($175pergame),excludingfacilityfeesandincludesticketsto
thepre-season,regularseasonandapost-seasongame.Thisprovidestotalestimated
revenuesof$3,207,050(1,666side-lineclubseatsx$1,925).
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
Roughriderswouldreceiveaportionoftheclubseatingrevenuesbasedon$75per
ticketpergameor$825forthepre-seasonandregularandpost-season.These
amountsarebasedupontheRoughrider’sestimatedticketpriceforseatsinthat
sectionoftheFacility.
Asaresult,itisestimatedthattheRoughriderswouldreceivetotalannualgrossclub
seatingrevenueof$1,374,450($75x1,666side-lineclubseatsx11totalgames)
basedontheseassumptions.
8
Historically,theRoughridershavebeenresponsibleforthesaleofclubseating.Under
aRepresentativeBusinessRelationshiptheRoughriderswouldprefertostay
connectedwiththeirfanbaseandthereforetohaveresponsibilityforthesaleofclub
seats.GlobalSpectrumhasassumedthata20%commissionwouldbepaidtothe
organizationthatisresponsibleforthesaleofclubseating.Basedontotalestimated
clubseatingrevenuesof$3,207,050thetotalcommissionstotheRoughriderswould
be$641,410.
ForpurposesofthisanalysisithasbeenassumedthattheRoughriderswillbe
responsibleforthesaleofclubseatingandwillearncommissionrevenue.
Suites
BasedoninformationpreparedbyStadiumConsultantsInternationalitisproposedthat
theFacilitycontains40suitescontaining18ticketseach.Basedoninformation
providedbytheRoughridersithasbeenassumedthattheycansell25suitesatan
averagesuitepriceof$40,000,excludingfacilityfees.Thisprovidestotalestimated
revenuesof$1,000,000(25suitesx$40,000).
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
Roughriderswouldreceiveaportionofsuiterevenuesbasedon$75persuiteticket
pergameor$825forthepre-seasonandregularandpost-season.Theseamountsare
basedupontheRoughrider’sestimatedticketpriceforseatsinthatsectionofthe
Facility.
Asaresult,itisestimatedthattheRoughriderswouldreceivetotalannualsuite
revenueof$371,250($75x25suitesx18ticketspersuitex11totalgames)basedon
theseassumptions.
UnderaRepresentativeBusinessRelationshiptheRoughriderswouldprefertostay
connectedwiththeirfanbaseandthereforetohavetheopportunitytosellsuites.
GlobalSpectrumhasassumedthata20%commissionwouldbepaidtothe
organizationthatisresponsibleforthesaleofsuites.Basedontotalestimatedsuite
revenuesof$1,000,000thetotalcommissionstotheRoughriderswouldbe$200,000.
ThereispotentialthattheFacilitycouldselltheremaining15suites.
ForpurposesofthisanalysisithasbeenassumedthattheRoughriderswillbe
responsibleforthesaleof25suitesandwillearncommissionrevenue.
The following table provides financial information with respect to revenue from
ticket sales, club seating and suites for the benefit of the Roughriders:
Generalseating,clubseatingandsuites
(unaudited)
Representative
business
relationship
2007
2008-09
$12,790,278
$9,363,094
$8,357,284
1,374,450
430,748
346,972
Suites(note1)
371,250
-
-
Commissionsonsaleofclubseatingand
suites
841,410
-
-
$15,377,388
$ 9,793,842
$ 8,704,256
Generalseating(note1)
Clubseating(note1)
Total
Note 1–In2007and2008-09theRoughridershostedahomeplayoffgame.Asa
result,generalandclubseatingandsuitesincludesticketrevenuefromoneplayoff
game.TheRepresentativeBusinessRelationshipincludesahomeplayoffgame.
Overall,undertheRepresentativeBusinessRelationshiptheRoughriderswould
generateincreasedgeneralseating,clubseatingandsuitesrevenuesintheFacilityas
comparedtotherevenuesgeneratedin2007and2008-09inMosaicStadium.
9
2) Sponsorships, signage and facility naming rights
Current business relationship
UnderthecurrentbusinessrelationshiptheRoughridersdonotpayanyportionofthe
in-stadiumsponsorshipandsignagerevenuestotheCity.Inaddition,theRoughriders,
withapprovalfromtheCity,havesoldcertainsponsorshiprightstoMosaicCanada,
mostnotably,namingrightstoMosaicStadiumwhichincludessignageontheexterior
ofthestadiumandturfsignageforatenyearperiodforatotalfeeof$3,750,000of
which$562,500hasbeenallocatedtoaStadiumImprovementFund.
Representative business relationship
GlobalSpectrumhasforecastedanoverallincreaseinrevenuesrelatedto
sponsorships,signageandfacilitynamingrights.
BasedoninformationprovidedbytheRoughridersithasbeenassumedtheannual
revenuesderivedfromsponsorshipandsignagewillbe$5,000,000.GlobalSpectrum
hasassumedthatthesponsorshipandsignagerevenueswillbeequallysharedbythe
FacilityandRoughridersafterpaymentofa20%commissionbasedongross
sponsorshipandsignagesales.Asaresult,itisestimatedthattheRoughrider’sshare
oftheFacility’ssponsorshipandsignagerevenuesare$2,000,000($5,000,000lessa
20%commissionof$1,000,000x50%).
BasedoninformationprovidedbyCICandtheRoughriders,revenuesderivedfrom
facilitynamingrightswillbeforthebenefitoftheFacilitywithnoamountsbeing
providedtotheRoughriders.
Historically,theRoughridershavebeenresponsibleforthesaleofsponsorshipand
signage.UnderaRepresentativeBusinessRelationshipithasbeenassumedthatthe
Roughriderswouldcontinuetobeincludedinthesellingofsponsorshipsandsignage.
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
Roughriderswillsell50%ofthetotalsponsorshipandsignagepackagesintheFacility.
GlobalSpectrumhasassumedthata20%commissionwouldbepaidtothe
organizationthatisresponsibleforthesaleofsponsorships,signageandfacility
namingrights.Basedontheestimatedgrossadvertisingrevenueof$5,000,000the
totalcommissionstotheRoughridersareestimatedtobe$500,000($5,000,000x50%
X20%).
The following table provides details with respect to the Roughrider’s share of
sponsorship, signage and facility naming rights:
Sponsorships,signageandfacility
namingrightsrevenue
(unaudited)
Representative
business
relationship
2008-09
Sponsorships,signageandfacility
namingrights(note1)
$-
$2,583,086
$2,077,934
355,000
355,000
410,000
Localradioandtelevisionrights(note2)
Roughrider‘sshareofFacility
sponsorshipsandsignage
Commissionsonsaleof sponsorships
andsignage
2,000,000
2007
-
-
-
-
500,000
Total
$2,855,000
$2,938,086
$2,487,934
Note 1–Doesnotincludenon-monetarysponsorships(2008-09-$849,303,2007-
$926,212).
10
Note 2–BasedoninformationprovidedbytheRoughridersithasbeenassumedthat
localradioandtelevisionrightswouldbesimilarto2008-09.
Overall,undertheRepresentativeBusinessRelationshiptheRoughrider’sshareof
sponsorships,signageandfacilitynamingrightsrevenuewoulddecreasefromwhatis
currentlybeinggeneratedatMosaicStadium.
3) Merchandise
Current business relationship
Currently,theRoughriderssellmerchandisethroughtheRiderStorelocatedatMosaic
Stadium.Underthecurrentbusinessrelationship,theRoughridersdonotpayafee
basedonapercentageofsales(whichwouldbestandardforretailoperations)tothe
Cityonmerchandisesales.
Representative business relationship
GlobalSpectrumhasmadetheassumptionthattheFacilitywillnotreceiveafeebased
onapercentageofRoughridermerchandisesales.Asaresult,thereisnochangewith
respecttothisrevenuestreamfortheRoughriders.
However,itisourunderstandingthattheproposedsquarefootageforaRoughrider
storeintheFacilityislargerascomparedtothecurrentRiderStoreinMosaicStadium.
Inaddition,theRoughriderstoreintheFacilitywillbemodernized.Thiswillprovidethe
Roughridersagreateropportunitytogenerateincreasedmerchandiserevenuesover
andabovewhatiscurrentlybeinggeneratedfromtheRiderStoreatMosaicStadium.
GlobalSpectrumhasassumedthattheRoughriderswillnotberequiredtopaythe
FacilityanyrentforaRoughriderstore.
TheRoughriderstracksalesbyeachindividualstorebutnotcosts.Asaresult,inorder
toestimatethemerchandisecostsrelatedtotheRiderStore,weappliedtheoverall
netprofitpercentageearnedonmerchandisesalesasawhole(26%in2008-09and
31%in2007).
The following table provides financial information with respect to merchandise
sales made at Mosaic Stadium for the Roughriders.
Merchandisesales(stadiumonly)
(unaudited)
Representative
business
relationship
(note1)
2008-09
2007
Sales
$4,117,173
$4,117,173
$3,685,173
Costs
3,046,708
3,046,708
2,542,769
$ 1,070,465
$ 1,070,465
$ 1,142,404
Gross margin
Note 1-Asperabove,GlobalSpectrumhasassumedthattheFacilitywillnotreceivea
feebasedonapercentageofRoughridermerchandisesales.Asaresult,itisassumed
thattheseamountswouldbesimilarto2008-09.
4) Concessions and catering
Current business relationship
Underthecurrentbusinessrelationship,theRoughridershavetheexclusiverightto
sellfoodandbeveragethroughconcessionsatMosaicStadiumandthepracticefield
duringgamedaysandfurtherduringJunior,HighSchool,UniversityofReginaRams
footballgamesandspecialevents(excludingcommunityeventssponsoredbythe
City).
11
In2008,theRoughridersengagedAramarkCanadaLtd.(“Aramark”)onaoneyear
renewablecontracttoprovidemanagementservicesforthestadium,practicefieldand
clubseatingconcessions.Aramarkreceivesamanagementfeeof8.5%oftotalsales.
In2008,theaverageconcessionsalesperpersonattendingRoughriderhomegames
wereapproximately$10.00.
Representative business relationship
a) Concessions
GlobalSpectrumhasincreasedtheconcessionsalesperpersonwiththeexpectation
thatnew,efficientfacilitieswillgenerateincreasedsalesascomparedtowhatis
currentlybeingexperienced.
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
averageconcessionsalesperpersonattendingRoughriderhomegamesattheFacility
willbe$15.00forgeneralseatingand$35.00forclubseating.Furthermore,
assumptionshavebeenmadewithrespecttoattendanceatRoughriderhomegames
(seediscussionwithrespecttopaidattendanceonpage8).Itisestimatedthatthe
grossconcessionsaleswouldbe$4,857,985(281,105totalgeneralseatingpaid
attendancex$15.00and18,326totalclubseatingpaidattendancex$35.00)basedon
theseassumptions.
GlobalSpectrumhasmadetheassumptionthatconcessionswouldbeoperatedbya
concessionaire.Inaddition,GlobalSpectrumassumedthattheconcessionairewould
paytheFacilityacommissionbasedon30%ofgrossconcessionsalesonRoughrider
homegamesandtheFacilitywouldshare50%ofthesecommissionswiththe
Roughriders.Asaresult,theRoughriderswouldreceiveconcessioncommission
revenueequalto15%ofgrossconcessionsalesor$728,698($4,857,985x15%).
GlobalSpectrumhasassumedthattheRoughriderswillnotreceivecommissions
earnedonconcessionswithrespecttonon-Roughriderevents.
b) Catering
Asmentionedabove,ithasbeenassumedthattheRoughriderswillsell25suiteseach
containing18tickets.GlobalSpectrumhasassumedthat75%oftheavailablesuite
ticketswouldbeusedforpre-seasonandregularseasongames(3,375ticketsoutofa
totalof4,500tickets)and90%forhomeplayoffgames(405ticketsoutofatotalof
450tickets).
GlobalSpectrumhasassumedthattheRoughriderswillnotreceivecommissions
earnedoncateringwithrespecttonon-Roughriderevents.
BasedoninformationprovidedbytheRoughridersithasbeenassumedthatthe
averagesuitecateringsalesperpersonattendingRoughriderhomegamesinthe
Facilitywillbe$35.00.Itisestimatedthatthegrosscateringsaleswouldbe$132,300
(3,375totalattendanceforpre-seasonandregularseasongamesand405attendance
forahomeplayoffgamex$35.00)basedontheseassumptions.
GlobalSpectrumhasmadetheassumptionthatcateringwouldbeoperatedbya
concessionaire.Inaddition,GlobalSpectrumassumedthattheconcessionairewould
paytheFacilityacommissionbasedon20%ofgrosscateringsalesonRoughrider
homegamesandtheFacilitywouldshare50%ofthesecommissionswiththe
Roughriders.Asaresult,theRoughriderswouldreceivecateringcommissionrevenue
equalto10%ofgrosscateringsalesor$13,230($132,300x10%).
12
The following table provides financial information with respect to concession
and catering for the Roughriders.
Concessionandcatering
(unaudited)
Concessionsales
Concessioncommission(15%of
grosssales)
Cateringcommission(10%ofgross
sales)
Representative
business
relationship
(note1)
2008-09
2007
$-
$3,355,376
$2,081,399
728,698
-
-
13,230
-
-
-
1,960,895
1,027,114
$ 741,928
$ 1,394,481
$ 1,054,285
Expenses
Net profit to the Roughriders
Note1–Roughriderhomegamesonlyandincludesahomeplay-offgame.
Overall,undertheRepresentativeBusinessRelationshiptheRoughrider’snetprofiton
concessionandcateringsalesrepresentsadecreaseoverwhatiscurrentlybeing
generatedatMosaicStadium.
5) Green and White Lounge (VIP Lounge)
Current business relationship
UnderthecurrentbusinessrelationshiptheRoughridersalsogenerateprofitsthrough
theGreenandWhiteLounge.TheRoughridershaveanagreementwithAramark
through2011toprovidealcoholconcessionservicesforthestadiumandservicesfor
theGreenandWhiteLounge.Themanagementservicefeeforalcoholconcession
servicesis10%ofalcoholsalesandthemanagementfeefortheGreenandWhite
Loungeis$12,000perannum.TheRoughridersincurallcostsassociatedwith
providingalcoholconcessionsandGreenandWhiteLoungeservices.
Forthe2008seasontheGreenandWhiteLoungehad94tableswithatotalof416
seats.Thetablesarepricedasfollowsandincludeamembershipandadvertising
component:
i)
ii)
iii)
78tablesof4@$2,000pertable
12tablesof6@$3,000pertable
4tablesof8@$4,000pertable
Representative business relationship
BasedoninformationpreparedbyStadiumConsultantsInternationaltherewillno
longerbeaseparateGreenandWhiteLoungeasitcurrentlyexistsatMosaicStadium.
Rather,theFacilitywillhaveaVIPlounge,withcapacityof1,600people,attachedto
theclubseatingarea. As a result, there is not a separate revenue stream for the
Roughriders as it is included in revenues from club seating.
13
The following table provides financial information with respect to the Green and
White Lounge (VIP Lounge):
GreenandWhiteLounge(VIPLounge)
(unaudited)
Revenues
Representative
business
relationship
2007
2008-09
$-
$168,758
$155,462
Alcoholandfood
-
158,080
138,102
Expenses
-
119,179
114,143
$-
$ 207,659
$ 179,421
Membershipandadvertising
Net profit to the Roughriders
6) Parking (game day)
Current business relationship
UnderthecurrentbusinessrelationshipwiththeCitytheRoughridershavetheright
andlicencetooccupyongamedays,certainparkingareasaroundthestadium.
Representative business relationship
UndertheRepresentativeBusinessRelationshiptheRoughriderswouldbeentitledto
parkingrevenuesrelatedtohomegames.Basedoninformationprovidedbythe
Roughridersithasbeenassumedthat200spaceswillbesoldfor$20perRoughrider
homegame.
TheProFormainformationassumesthatunderaRepresentativeBusiness
RelationshiptheFacilitywouldreceive50%ofgamedayparkingrevenueswiththe
remaining50%beingreceivedbytheRoughriders.Thisrevenueisestimatedat
$22,000forpre-season,regularseasonandpost-seasongames(200x$20x11games
x50%).
TheProFormaanalysisdoesnotaddressthecostofnon-gamedayparkingtothe
Roughriders.
The following table provides details with respect to parking revenues:
Parkingrevenue
(unaudited)
Parking
Representative
business
relationship
$22,000
2008-09
$83,485
2007
$89,374
BasedontheRepresentativeBusinessRelationship,theRoughrider’sshareofparking
revenuewoulddecreasefromwhatiscurrentlybeinggeneratedatMosaicStadium.
14
7) Facility fee revenue
Current business relationship
Currently,facilityfeesarebeingchargedforthepurposeofMosaicStadiumrenewal,
includingthepurchaseofproperty,plantandequipmentrelatingtoMosaicStadium.In
2005facilityfeeswerecomprisedofa$2.00surchargeoncertaingameadmission
tickets.In2008thesefeeswereincreasedto$3.00.TheRoughridershaveincreased
thesefeesforthe2010seasonto$5.00.Thefacilityfeesurchargeisnotchargedon
non-paidticketsincludingticketsprovidedviasponsorships,playerandstaffticketsand
othercomplimentarytickets.
In2008,totalfacilityfeesof$832,000weregeneratedfrompre-season,regularseason
andpost-seasongames.
Representative business relationship
TheRoughridershaveincreasedthefacilityfeeto$5.00in2010.Basedoninformation
providedbytheRoughridersithasbeenassumedthefacilityfeewillbe$6.00inthe
Facility.Basedontheassumptionswithrespecttototalpaidattendance(281,105total
generalseatingpaidattendance,18,326totalclubseatingpaidattendanceand4,950
suiteattendance)a$6.00facilityfeewouldgenerate$1,826,286.Ithasbeenassumed
thatthefacilityfeeischargedonticketsincludedinsponsorshippackages.
GlobalSpectrumhasassumedthatallfacilityfeesgeneratedareforthebenefitofthe
FacilityandnoamountwouldbeprovidedtotheRoughriders.
The following table provides financial information with respect to facility fees
revenue:
Facilityfeerevenue
(unaudited)
Representative
business
relationship
Facilityfees(note1)
$1,826,286
2008-09
$832,000
2007
$459,686
Note 1–BasedontheRepresentativeBusinessRelationship,facilityfeerevenue
wouldexceedtheamountsgeneratedin2007and2008-09.
8) Facility rent
Current business relationship
TheannualrentforMosaicStadiumisthelesserof$200,000or25%ofannualnet
profits.Allrevenues,costsandexpensesfromanyGreyCupgameareexcludedinthe
calculationofrentunderthecurrentleaseagreement.
Representative business relationship
BasedoninformationprovidedbyGlobalSpectrumandCIC,ithasbeenassumedthat
theRoughriderswouldpayrentbasedon12.0%ofgrossticketsalestothe
Roughriders.BasedontheassumedRoughridergrossticketsalesasnotedpreviously
inthisreport(generalseatingof$12,790,278,clubseatingof$1,374,450andsuitesof
$371,250)itisestimatedthatfacilityrentwouldbe$1,744,317.
The following table provides financial information with respect to facility rent
expense:
Facilityrentexpense
(unaudited)
Rent
Representative
business
relationship
$1,744,317
2008-09
$200,000
2007
$200,000
BasedontheRepresentativeBusinessRelationship,theRoughrider’sfacilityrent
wouldexceedthecurrentrentbeingpaidforMosaicStadium.
15
9) Other non-stadium leases related to Roughrider business operations
Current business relationship
InordertoaddressthespaceconstraintsofMosaicStadiumtheRoughridershave
enteredintoadditionalnon-stadiumleasesforRoughriderbusinessoperations,
includingbusinessofficespace,warehousespaceandafitnessfacility.Thecurrent
annualbaserentfortheseadditionalleasestotal$207,200.
Representative business relationship
ItisourunderstandingthatinthedesignoftheFacilitytheRoughriderswillbe
providedundevelopedspaceforabusinessoffice,ticketoffice,lockerrooms,other
coachandplayerfacilities,aVIPlounge,aRoughriderstoreandotherRoughrideronly
areas.Itisalsoourunderstandingthattheproposedspaceexceedsthespacethatthe
RoughriderscurrentlyuseandshouldmeettheRoughrider’scurrentandfuturegrowth
needs.ThismightallowtheRoughriderstoreduceoreliminateoffsiteleasesto
decreaseleasingcostsintheamountof$207,200peryear.
10) Leasehold improvements
Current business relationship
TheRoughridershavepaidforvariousleaseholdimprovementsatMosaicStadiumover
theyearsincludingtheRoughrider’sbusinessoffice,lockerrooms,othercoachand
playerfacilities,clubseatingandpressboxes,Green&WhiteLounge,theconcourse,
theRiderStoreandotherareas.
Representative business relationship
ItisourunderstandingthatontheFacilitytheRoughriderswillbeprovided
undevelopedspaceforabusinessoffice,lockerrooms,othercoachandplayer
facilities,aRoughriderstoreandotherRoughrideronlyareas.TheRoughriderswillbe
responsibleforthecoststodevelopthisspacetomeettheirneedsandspecifications.
TheRoughridershaveestablishedaStadiumImprovementFundforthepurposeof
MosaicStadiumfacilityrenewal,includingthepurchaseofproperty,plantand
equipmentrelatingtotheFacility.AtMarch31,2009thebalanceinthisfundwas
approximately$4.5millionwhichcouldbeusedbytheRoughriderstofundthe
developmentoftheRoughriderspacewithintheFacility.
BasedoninformationprovidedbyCICandtheRoughridersithasbeenassumedthat
theRoughriderswouldberesponsibleforthecostsoftemporaryseating.
11) Practice field
Current business relationship
UnderthecurrentbusinessrelationshiptheCityisresponsibleformaintenanceofthe
practicefield(cut,water,aerate,fertilizeandmarkthepracticefield),inadditionto,
maintenanceandrepairoftheperimeterfencingandstoragebuilding.TheRoughriders
areresponsibleforthecostofrepairsforalldamagetothepracticefieldcausedbythe
Roughridersfromotherthanordinaryusage.
Representative business relationship
ItisourunderstandingthattheinitialdraftdesignoftheFacilityandsurroundingarea
includesspaceforapracticefield.BasedondiscussionswithCIC,theRoughridersand
theCityofRegina,theFacilitywillnotberesponsibleforthecostofconstructingand
maintaininganewpracticefield.
16
12) Grey Cup events
Current business relationship
Underthecurrentbusinessrelationshipallrevenues,costsandexpensesfromany
GreyCupgameareexcludedinthecalculationofrent.
TheRoughridershavegeneratednetprofitsfromspecialeventsheldatMosaic
Stadium.In1995theRoughridershostedthe83rdGreyCupwhichgenerated
$1,120,685ofprofitfortheRoughriders.Inaddition,in2003theRoughridershosted
the91stGreyCupwhichgenerated$1,911,777ofprofitfortheRoughriders.Forboth
GreyCupstheRoughriderswerenotrequiredtopayaportionoftheprofitstotheCity.
Representative business relationship
GlobalSpectrumhasnotaddressedthesituationwheretheRoughridershostaGrey
CupgamethatisheldintheFacility.BasedoninformationpreparedbyStadium
ConsultantsInternationalitisproposedthat12,000temporaryseatscanbeaddedfora
GreyCupgamebringingtotalseatingcapacityto45,000less255seatsformediaand
coaches.
Basedonassumptionspreviouslynotedinthisreportwithrespecttofacilityrentithas
beenassumedthattheRoughriderswouldpayrentbasedon12.0%ofgrossticket
sales.WeunderstandthatticketpricesforaGreyCupgamewouldbeincreasedfrom
pricesforpre-season,regularseasonandpost-seasongames,however,forpurposes
ofthisanalysisithasbeenassumedthatticketpricesareconsistentwiththoseprices
aspreviouslynotedinthisreport.Inaddition,ithasbeenassumedthattheGreyCup
gameissoldout.
ItisestimatedthatgrossticketsalestotheRoughriderswouldbe$2,114,958(general
seatingpaidattendanceof42,065x$45.50,clubseatingpaidattendanceof1,960x
$75,suiteattendanceof720x$75)basedontheseassumptions.Asaresult,itis
estimatedthattheRoughriderswouldpayrentof$253,795($2,114,958x12.0%)
basedontheseassumptions.
Inaddition,basedonassumptionspreviouslynotedinthisreportwithrespecttofacility
feesithasbeenassumedthata$6.00facilityfeewouldbechargedonGreyCupgame
tickets.BasedontheaboveassumptionswithrespecttoGreyCupgameattendanceit
isestimatedthattheFacilitywouldreceivefacilityfeesof$268,470(44,745total
attendancex$6.00).
13) Facility access
Current business relationship
ItisimportanttonotethattheRoughridersaretheprincipaltenantofMosaicStadium
andassuchtheygenerallyhaveunrestrictedaccesstothestadiumandtheplaying
fieldareaofthestadium.
Representative business relationship
ItisourunderstandingthatthelevelofaccessfortheRoughridersisexpectedto
changeintheFacility.TheRoughriderswouldstillbetheprincipaltenantoftheFacility
butwouldonlyhaveunrestrictedaccesstotheirspecificareasofthestadium.
17
14) Special events (concerts and other)
Current business relationship
Underthecurrentbusinessrelationship,theRoughridershavegeneratednetprofits
fromconcerteventsheldatMosaicStadium,beingtheRollingStonesBiggerBang
Tourconcerts,andmostrecentlytheAC/DCBlackIceWorldTourconcert.These
concerteventsgeneratedtotalnetprofitsof$405,126fortheRoughriders.TheCity
receivedcommissionpaymentstotaling$137,186onconcessionsalesforthese
events.
Representative business relationship
ItisourunderstandingthatGlobalSpectrumhasassumedthattheRoughriderswillnot
receiveanyportionofconcession,catering,parkingormerchandisesalesatanynonRoughriderevents.
15) Security
Current business relationship
TheRoughridersarecurrentlyresponsibleforthecostofallnecessaryandadequate
securityforallgamesandothereventsheldatMosaicStadiumsponsoredbyorunder
thecontroloftheRoughriders.
Representative business relationship
GlobalSpectrumhasassumedthattheFacilitywillberesponsibleforthecostof
securityforallhomegames.
16)University of Regina Ram’s (the “Rams”) 50/50 Draw
Current business relationship
UnderthecurrentbusinessrelationshiptheRoughridersprovidetheUniversityof
ReginaRams(the“Rams”)withfullaccesstoMosaicStadiumandadjoiningareasfor
thesaleof50/50ticketsatallRoughriderhomegames.Inexchange,theRamspaythe
Roughridersanannualfacilityrentalcharge.Itisourunderstandingthatduringthe
twelvemonthperiodsendedDecember31,2007and2008respectively,the
Roughridersreceivedcashof$80,633and$123,785fromtheRamsforthe50/50
facilityrentalcharges.ItisalsoourunderstandingthattheRoughridersdonated
$100,000ofthe$123,785collectedin2008tosupporttheUniversityofSaskatchewan
Huskies,SaskatoonHilltops,ReginaPrairieThunderandFootballSaskatchewan
($25,000each).
Representative business relationship
GlobalSpectrumhasnotaddressedthisarrangement.PerdiscussionwithGlobal
Spectrumtypically50/50monieswouldbesplitbetweentheteamandthe
beneficiarieswithnoamountsbeingpaidtotheFacility.
17) Volunteer honorariums
Current business relationship
Underthecurrentbusinessrelationshipnon-profitorganizationshavebeengiventhe
opportunitytofundraisebyworkingfortheorganizationsthatsellconcessionsatthe
stadium.Inaddition,theRoughriderspayhonorariumstotheReginaLionsBandfor
tickettaking.
18
Representative business relationship
GlobalSpectrumhasnotaddressedthisarrangement.PerdiscussionwithGlobal
Spectrum,ifathirdpartyconcessionairewasusedtheconcessionaireagreement
couldrequirethemtousenon-profitorganizations.
18) Insurance
Current business relationship
TheRoughridersagreetosecureandmaintaina$5,000,000generalliabilityinsurance
policyand$500,000tenant’slegalliabilityinsurance.TheRoughriderspayallpremiums
andothermoneysformaintainingtheinsuranceandassigntotheCitythebenefitofall
policiesandcontractsofinsurancewhichcoversthepremises.
Representative business relationship
UnderaRepresentativeBusinessRelationship,itisourunderstandingthatthe
Roughriderswouldcontinuetosecureandmaintaingeneralliabilityandtenant’slegal
liabilityinsurance.
19) Other operating expenses
Current business relationship
TheRoughriderscurrentlypaytheCityforvariousexpenseswithrespecttoMosaic
Stadiumunderthetermsandconditionsoftheleaseagreement.Thisincludesstadium
rent,stadiumutilities,certainrepairsandmaintenanceandothercosts.
Representative business relationship
UndertheRepresentativeBusinessRelationshiptheRoughriderswouldberequiredto
payfacilityrent.
UndertheRepresentativeBusinessRelationshipGlobalSpectrumhasassumedthat
gamedaycostsare$75,000perhomegameor$825,000intotalforpre-season,
regularseasonandpost-seasongames.BasedondiscussionswithGlobalSpectrum
thisincludesgamedaycostsincludingtickettakers,ushers,security,utilities,basic
videoboardoperationandcleaning.
Based on information provided by Global Spectrum, it has been assumed that
the Roughriders will not be required to pay for these expenses and therefore
these will be a cost to the Facility.
Inaddition,itwouldbeexpectedthatrepairsandmaintenancecostswouldbelowerin
theinitialyearsoftheFacility.
19
AppendixA:Sensitivityanalysis
TheRepresentativeBusinessRelationshipcontainsanumberofassumptions.Paid
attendanceisakeyassumptionasitdirectlyimpactsgeneralseating,clubseating,
suites,commissionsonthesaleofclubseatsandsitesmerchandisesalesandcosts,
concessionandcateringcommissions,parking,facilityfeesandfacilityrent.Inaddition,
pricingovertickets,concessions,cateringandfacilityfeesimpactsanumberof
revenuesandexpenses.
ThefollowingtablesummarizesthesensitivityoftheRepresentativeBusiness
Relationshiptochangesinassumptions.
Stadiumoperations
(unaudited)
Revenues
Generalseating
Representative
business
relationship
Scenario2
(note2)
Scenario3
(note3)
Scenario4
(note4)
$12,790,278
$11,627,525
1,374,450
1,249,500
1,029,000
1,940,400
Suites
371,250
337,500
337,500
445,500
Commissionsonsaleofclub
seatingandsuites
841,410
783,100
680,200
2,355,000
500,000
2,355,000
1,105,520
2,355,000
Commissionsonsaleof
sponsorshipsandsignage
2,355,000
500,000
500,000
500,000
Merchandise
Concessionandcatering
commissions
4,117,173
741,928
4,117,173
674,265
3,499,597
4,117,173
557,366
1,160,732
22,000
20,000
20,000
22,000
1,826,286
1,660,260
1,372,050
2,500,589
24,939,775
23,324,323
19,926,416
31,662,266
3,046,708
2,589,702
3,046,708
Clubseating
Sponsorshipsandsignage
Parking
Facilityfees
Total
Expenses
Merchandise
3,046,708
$9,575,703 $17,515,352
Sponsorshipsandsignage
1,998,690
1,998,690
1,998,690
1,998,690
Rent
1,744,317
1,585,743
1,313,064
2,388,150
Facilityfees
1,826,286
1,660,260
1,372,050
2,500,589
8,616,001
8,291,401
7,273,506
9,934,137
16,323,774
15,032,922
12,652,910
21,728,129
(12,626,477)
(12,626,477)
(12,626,477)
(12,626,477)
$ 2,406,445
$
$ 9,101,652
Total
Revenues in excess of expenses
from Stadium Operations
Netexpensesrelatedtononstadiumoperations
Roughrider net income (loss)
$
3,697,297
26,433
Note 1–Basedonassumptionsasoutlinedpreviouslyinthisreportincludingthe
assumptionthatpaidattendanceis85%ofcapacityforgeneralandclubseatingand
thereisahomeplay-offgame.
Note 2-Basedonassumptionsasoutlinedpreviouslyinthisreportincludingthe
assumptionthatpaidattendanceis85%ofcapacityforgeneralandclubseating,
howeverthereisnohomeplay-offgame.
Note 3–Changesfromscenario1-Paidattendanceisassumedtobe70%ofcapacity
forgeneralandclubseatingandthereisnohomeplay-offgame.Inaddition,
merchandisesalesandexpensesdecreaseby15%.
20
Note 4-Changesfromscenario1-Paidattendanceisassumedtobe97%ofcapacity
forgeneralseatingand100%ofclubseatsaresold.Inaddition,ticketprices,
concessionandcateringpricesandfacilityfeesincreaseby20%.
21